Blockchain has lost its decentralized spirit

A narrative has taken root in the realm of blockchain technology, one that champions the gradual transition from centralized control to a decentralized future. Yet this story, often recited by those at the helm, overlooks a fundamental truth about power: Once seized, it is rarely surrendered without a struggle.

This belief that a centralized beginning can smoothly transition to a decentralized ethos is more myth than reality, akin to convincing a child to relinquish their tight grasp on a coveted sweet. The intention here isn’t to cast venture capitalists or early stakeholders as adversaries — it’s to advocate for a balance, for fairness that underpins the very foundation of blockchain.

I often hear, “We will start out centralized, and we will become more decentralized later.” But I believe this is nonsense!

One of the hardest things to give up is power. This notion is vividly illustrated by the French Revolution, a historical event that epitomizes the struggle to redistribute power from an entrenched monarchy to a democratic governance structure.

Despite the promise of liberty, equality and fraternity, the revolution faced immense resistance from those unwilling to cede control, leading to a turbulent period of conflict and transformation. This historical episode serves as a poignant reminder that once power is acquired, relinquishing it is a far more formidable challenge than many anticipate.

The illusion of control

As blockchain ventures flourish, the grip of those in control tightens, with early investors and builders basking in the success their influence has wrought.

Conversely, during tumultuous times, these same figures embark on campaigns of reassurance, painting over cracks while strategically planning their exits. This stark duality reveals a profound flaw in the prevalent “centralize now, decentralize later” mantra, significantly underestimating the seductive allure of power and the inherent challenges in relinquishing it once established.

The promise of distributed authority is at the heart of the blockchain revolution. The reimagining of governance where innovation serves not just the circulation of capital, but empowers and amplifies a multitude of voices (not just those traditionally heard in the corridors of wealth). Yet, a troubling reality overshadows this ideal: A staggering concentration of over 80% of blockchain assets in the hands of a mere 1% of wallets.

Regardless of whether these assets make up projects that aim to fully decentralize or not, the fact of the matter is that early stakeholders and VCs often hold the largest piece of the pie for new blockchains simply because they come in first, when it’s riskiest.

This imbalance transcends mere issues of fairness, striking at the very viability of blockchains as engines of innovation and inclusivity.

It’s a travesty that the vast majority of value creation does not come from this 1%, underscoring a critical disconnect. Those who contribute the most to the ecosystem often have the least say in its direction and the smallest share in its success — those early VCs holding all the tokens do provide impact with their initial investments, but their participation usually stops there. And because the protocol’s governance is based on the ownership of the token, the new builders don’t have the weight to make major decisions by the major token holders.

This stark discrepancy isn’t just unfair; it’s fundamentally counterproductive, eroding the incentive for innovators, developers and community members to pour their energy and creativity into the ecosystem.

By sidelining the very individuals who are the lifeblood of innovation, blockchain ecosystems risk stagnating, as the centralized accumulation of benefits stifles the diverse input and collaboration essential for breakthroughs and resilience.

Such a structure threatens the long-term sustainability and incentive for valuable contributors to remain engaged and invested in these projects. The long-term viability of blockchain technology depends on its ability to foster a genuinely inclusive environment where contributions are recognized and rewarded appropriately, ensuring that all participants have a stake in the ecosystem’s success.

It’s time to start again

Where do we go from here?

I believe that many of the first-generation blockchains, the foundational layers that have been the bedrock of the industry, have veered too far off course. Their structures have solidified around centralization to a point where a return to true decentralization might no longer be feasible.

This isn’t to say they’re doomed for failure; far from it. The potential of blockchain technology is vast, its future inherently multichain, promising a landscape rich with diverse and interconnected networks.

However, we need to start afresh if we want to harness this potential fully. This proposition might seem daunting, yet considering the broader timeline of technological evolution, we’re still in the nascent stages of blockchain development.

The beauty of this space is its foundation in open source principles. Almost all blockchain technologies are open to being studied, modified and repurposed. This openness paves the way for new projects to emerge — i.e, reboots of existing chains, each carrying a distinct mission and fostering a unique culture.

Embarking on this path isn’t merely about technological innovation; it’s about reimagining the ethos that guides blockchain development. By initiating new projects with decentralization as a core principle, we stand a chance to correct the course.

This approach doesn’t merely replicate what came before, but builds upon it, learning from past missteps to create blockchains that are truly from the people, by the people and for the people.

To visualize the potential paths of blockchain, consider two atomic reactions: fusion and fission. A blockchain driven by a diverse, invested community is akin to a fusion reactor. It’s efficient, sustainable and produces a continuous outflow of energy. This model represents a decentralized ecosystem where power and rewards are evenly spread, fostering innovation and participation from all stakeholders. The result is a robust and vibrant network, capable of long-term growth and adaptation.

In contrast, a network dominated by a few mirrors the principles of a fission bomb: initially powerful, but ultimately leading to destruction. This reflects a centralized blockchain ecosystem, where concentrated power leads to rapid gains that are not sustainable over time. Such a structure can stifle innovation and lead to a fragile system, prone to collapse.

This analogy underlines the crucial choice blockchain faces between sustainable growth and short-term gains, emphasizing the need for a decentralized approach to ensure the technology’s long-term viability and success.

Decentralization as a starting point, not just a distant dream

Decentralization must be the cornerstone, not a mere aspiration, of blockchain’s journey. It’s about democratizing power, fostering a community where everyone’s voice matters and every contribution is valued from the outset.

At this pivotal juncture, the trajectory of blockchain hinges on our resolve to anchor it in decentralization from the very beginning. By prioritizing decentralization as our foundational principle, we chart a course toward a future where blockchain serves as a bedrock for equitable growth and democratic engagement.

Let’s seize this opportunity to redefine the landscape, ensuring blockchain remains a tool for empowering the many, not just the few. In doing so, we not only realize the full potential of blockchain technology but also contribute to the creation of a fairer, more inclusive world.

This is not just the path to technological innovation, but a step towards a more equitable and collaborative ecosystem.

We are still early.